Mitigation & Contribution (Part 1)

For any employment dispute which proceeds to hearing (whether before the Employment Relations Authority or the Employment Court) two issues will always arise for any ex-employee seeking to establish a grievance for unjustified dismissal. Mitigation of lost wages and contribution.

Up until the end of last year there had been numerous comments by both the Authority and the Court about mitigation and contribution. However, there lacked a “watershed” decision which really brought together all the principles and clearly articulated how those issues need to be addressed. Thankfully, at least for those of us who practice in the employment law area, a single decision of the Employment Court has addressed both topics in depth.

What is mitigation?

Before I get into discussing any part of the decision itself, it’s important to get a general idea about what mitigation means. Because both mitigation and contribution are important employment law issues - this article will only look at the former and not the latter, and as the name of the title suggests a second article will look at contribution.

Mitigation is founded on common law principles. Long before the implementation of employment legislation, mitigation had its place in general civil litigation.

What this means is that a claimant who is seeking damages against another is under an obligation to mitigate (minimise as much as possible) his or her loss.

An example of mitigation

A fairly common example, outside of the employment arena, lies in the area of negligence. Say a plumber works on your hot water cylinder and he, negligently, causes a leak which only becomes apparent after he has left. As a matter of commonsense you would try and stem the leak in the short term, and contact the plumber (or other person) to try and put a permanent stop to the leak. Not only, however, would this be a matter of commonsense it would also be a legal requirement (at least in terms of recovering full damages). The law would not simply allow you to let the leak cause huge damage while you sit idly by. Any claim to fully recoup your loss would require proof you attempted to mitigate the damage caused.

In employment law, a claimant seeking lost wages on the basis of an unjustified dismissal, has an obligation to try to mitigate the amount of the loss he or she has suffered as a result of the dismissal. In other words an unjustifiably dismissed ex-employee has to try and obtain alternate employment to justify being “reimbursed” lost wages.

Employers using non-mitigation as a defence

Some employers have used this obligation as a weapon in defending a grievance. The employer can do so by challenging whether the ex-employee has in fact attempted to mitigate his or her loss. The Court’s recent decision, however, may mean such a tactic is now weakened.

The Court acknowledged that an unjustifiably dismissed ex-employee may not be in the best frame of mind to vigorously search for alternative employment. A dismissal, particularly an unjustified one, can have a huge impact on an employee and it may be unreasonable to expect him or her to jump straight into a new job. So while there is an obligation to mitigate loss, that obligation may not be as difficult to discharge as it seems at first blush.

For me the decision, whilst not exactly changing employment law, solidifies an advantage to an alienated ex-employee pursuing a personal grievance. This means employers need to be aware that if they are going to defend a claim for lost wages on the basis the ex-employee simply sat on his or her hands, they need to be extremely cautious when doing so.